AC Company Inventory Optimization

With the development of economic globalization, logistics as "the third profit source" has already become an important means to improve competitiveness of enterprises. As an important part of the logistics, the costs of inventory directly affect the development and survival of enterprises. For manufacturing enterprises, inventories mainly exist in the terms raw materias、WIP and finished goods. They can ensure the continuing production and quickly meet the needs of customer orders. However, any form of inventory has certain costs, which means inventories often take up a lot of liquidity. In a cycle of materials turning into finished goods, the frequency of turnover reflects the earning capacity of enterprise’s capital investment. Under the same amount of investment, the higher the liquidity, the more revenue it brings to enterprise. Therefore, more and more people realize that the competition between modern manufactures has been transforming gradually from technology, quality and service to logistics and supply chain management. And,"inventory turnover" has become the core competitiveness of manufactures. Nowadays, optimizing inventory structure, reducing risks from inventory sluggish and overdue scrap, and improving inventory turnover under the premise of on time delivery, has become one of the key research topics of modern manufacturing.The recent business volume of AC Company is growing steady but the profitability is somewhat declining. This thesis is based on AC Company’s current status; using operation data to analyze current inventory status from perspectives of inventory turnover, on time delivery and forecast fluctuate. After research on the elements which affect inventory turnover and the methods which control inventory volume, it is found that the major incentives of obsolete stock are inventory accuracy rate, full kits rate and forecast accuracy, and these can affect enterprise inventory cost as well. Also, this thesis proposes how to optimize inventory accuracy, full kits rate, forecast accuracy and obsolete stock control, according to the principles of integrality, systemic and dynamic control. Furthermore, it proposed a solution of how to monitor inventory management in AC Company.